A man watches computer monitors at an office in Shanghai. Photo – Reuters

BEIJING—Investors dumped the stocks of some of China’s biggest Internet companies, as scandals with some smaller Chinese firms has shaken Wall Street’s confidence in the country’s businesses.

U.S.-listed shares of China’s leading search engine, Baidu.com Inc., and Sina Corp., the operator of the country’s Twitter-like messaging service, plunged 16% and 18%, respectively, in the last two days of trading on the Nasdaq Stock Market even though these companies haven’t been accused of wrongdoing.

A series of alleged accounting frauds this year at little-known Chinese companies listed in the U.S. has triggered a sharp shift in sentiment among investors, who are now worried about hidden business risks or financial problems.

“If the whole sector’s sentiment is negative, then investors tend to be panicking, and then they sell the most liquid names, regardless of whether there are really any problems,” said Jeffries analyst Cynthia Meng. “We don’t think that the flagship [Chinese] Internet names have accounting issues.”

For years investors, swept up in the broader China growth story, gave Chinese companies that listed their stocks on U.S. exchanges the benefit of the doubt on governance and regulatory issues.

That was particularly true of the Internet sector. Investors were prepared to overlook unreliable Internet traffic data, pervasive censorship, and a reliance on an inherently risky corporate structure in their enthusiasm to profit from the explosive spread of social media, online shopping and search.

The latest news to send investors running was a Thursday Reuters report quoting Robert Khuzami, the director of enforcement at the U.S. Securities and Exchange Commission, saying the Department of Justice is investigating accounting irregularities at Chinese firms.

A person close to the matter confirmed the Justice Department is investigating Chinese firms, but declined to identify the companies.

Along with Baidu and Sina, other major Chinese Internet companies plunged this week. Social-networking website Renren Inc. Friday fell 13% to $5.10 on the Nasdaq. Online video company Youku.com Inc., after losing 18% Thursday, gained 12 cents to $16.36 Friday. None of those companies have been accused of wrongdoing.

A Youku spokesman said the company hasn’t received any inquiries from U.S. regulators. A spokeswoman for Renren said the company hasn’t been contacted by the SEC.

Baidu, Sina and online-video company Tudou Holdings Ltd., whose U.S.-listed shares fell about 24% on Thursday and Friday, each declined to comment.

“The market seems to be factoring in the worst-case scenario” J.P. Morgan analyst Dick Wei told clients in a research note.

He noted concerns about accounting issues at some Chinese companies, and risks attached to a corporate structure used by many Chinese Internet companies to get around restrictions on foreign investment in the sector.

Chinese Internet stocks were buffeted last week following reports that Beijing was looking into ways to overhaul how it regulates the “variable interest entities” structure.

The structure uses a series of contractual agreements to allow an offshore holding company owned by foreign investors to effectively run a business inside China. It is used by most U.S.-listed Chinese companies.

Dozens of small Chinese companies listed in the U.S. have been accused by their auditors and short sellers of having lied to investors and misrepresented the true extent of their businesses over the last 12 months.

The SEC weighed in toward the end of last year and started investigating both the financial-services firms that helped bring the companies to market and the Chinese companies themselves.

Chinese tech companies aren’t without their challenges. Data describing China’s Internet sector can often be murky, whether it be from third-party researchers or Internet companies themselves.

That was highlighted earlier this year when Renren revised a key user number in its prospectus ahead of a U.S. initial public offering. Renren later said the change was due to typographical errors in the original data.

Market volatility and general investor concern in recent months have slowed to a trickle the flow of U.S. IPOs by Chinese Internet companies.

Xunlei Ltd., a Chinese online video-and-game service in which Google Inc. holds a small stake, in June filed for a U.S. IPO but the next month postponed it “due to stock market conditions.”